Low demand and investment to blame for slowdown, says Yashwant Sinha


Contraction in demand and reluctance to invest are key reasons for the current slowdown in the Indian economy, which grew at its slowest pace in over six years in the June quarter, said former Union finance minister Yashwant Sinha.

He said some corporates are sitting on a pile of cash, but are not making investments, thus affecting demand.

The former BJP leader was delivering a speech on the subject, Economic slowdown: structural or cyclical, at the Gokhale Institute of Politics and Economics here.

Sinha said figures, data and statistics put out in the country are not seen as reliable anymore and several international agencies like the IMF and the World bank have raised questions over them.

“Corporate, PSU sectors have suffered in the last one year. The demand in the economy, which is the growth engine, has come crashing down, he said.

The bureaucrat-turned-politician said the contraction in demand and reluctance to invest have led to the current slowdown in the Indian economy.

In the first quarter of FY20, India’s GDP grew at the slowest pace in as many as 25 quarters at 5 per cent.

Sinha said cash is not an issue with corporates.

“Some corporates are not investing because they depend on bank loans for investment and banks have withdrawn some of their facilities.

“But there are some corporate firms who are sitting on cash, but are not investing and the major reason behind this that is there is no demand, he said.


Written by Loknath Das